Longtime Apple executive Phil Schiller admitted to initially opposing fees for in-app transactions processed outside Apple’s payment system. His concern stemmed from potential conflict with a court order aimed at fostering competition within the App Store ecosystem. This revelation came during Schiller’s recent testimony in the ongoing legal battle with Epic Games, the creator of Fortnite.
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Schiller’s Testimony and the Epic Games Lawsuit
Schiller, who oversees the App Store, testified for three hours in an Oakland federal court. This follows his previous appearance nearly nine months prior in the same courtroom, as part of the protracted legal dispute with Epic Games. The core of Epic’s 2019 antitrust lawsuit argued that Apple’s App Store constituted an illegal monopoly, leveraging its then-exclusive payment system to generate billions in annual revenue. This system levied commissions ranging from 15% to 30% on in-app purchases.
While Judge Yvonne Gonzalez Rogers dismissed the monopoly allegations, she mandated Apple to reduce barriers around its payment system. This ruling allowed developers to incorporate links directing users to alternative payment methods within their apps.
Apple’s Response and Ongoing Legal Scrutiny
Apple spent over two years challenging Judge Rogers’ decision, exhausting all appeals before finally complying thirteen months ago. However, Apple’s implemented solution still requires a 12% to 27% commission on transactions processed through external payment systems. Furthermore, Epic contends that Apple introduced additional obstacles designed to deter users from adopting these alternatives. Consequently, Judge Gonzalez Rogers is currently deliberating whether to hold Apple in contempt of court, potentially compelling more substantial changes to their practices.
Expressing frustration with Schiller and other Apple witnesses regarding their unclear recollections of the decision-making process behind the alternative payment system rules, Judge Gonzalez Rogers postponed proceedings. This pause allowed for another judge to oversee the disclosure of internal Apple documents pertinent to the case. These documents proved crucial in refreshing Schiller’s memory about his initial hesitation to implement fees on external in-app transactions.
Concerns Over Compliance with Court Order
When questioned about his stance during April 2023 meetings, Schiller stated, “I had a question of whether we would be allowed to charge a commission.” He clarified, “It was a question about what was allowed under the injunction” issued by Judge Gonzalez Rogers. This admission sheds light on the internal debates within Apple regarding compliance with the court order and the potential legal ramifications of their chosen approach to alternative payment systems. The ongoing legal proceedings will determine whether Apple’s current implementation satisfies the court’s mandate or requires further adjustments to ensure fair competition within the App Store.
